TRANSCRIPT & VIDEO: Ask Warren Buffett on CNBC's Squawk Box - Part 6
President BARACK OBAMA (on tape): My friend and Hillary's friend, Warren Buffett... It is true that my friend and supporter Warren Buffett, for example... Let me tell you who I associate with. On economic policy, I associate with Warren Buffett...
BECKY: Welcome back, everybody. Again, we are live with Warren Buffett this morning at the Nebraska Furniture Mart in Omaha. And, Mr. Buffett, you may have just heard that sound. It was candidate Obama, before he was elected, talking about his relationship with you. We know that you supported him, that you voted for him, that you raised money for him. But we also have a question that came in from Robert this morning in New York, and he writes in, "Mr. Buffett, please describe in what capacity or role are you advising President Obama or his staff?"
BUFFETT: I've had a conversation or two with people--or not his staff, exactly, but in the administration. I've not had, aside from just seeing him at an occasion and just saying hello. But I've not had any real conversations with the president. He is the right president. And incidentally, this is the right country. I mean, we've got the right president, we've got the right country. You know, we're gummed up at the moment, but this is the place to be. And this is the right time. I mean, I wish I was 21 now instead of 78. So this is--the best days of America really do lie ahead. And President Obama is--he's very, very smart. He's got, I think, exactly the right goals. He's articulate and I--you know, he will be the right person to be the commander in chief in this economic crisis. But it is an economic crisis.
BECKY: It is an economic crisis. And in an earlier hour you talked about how we were hours or days away from the cliff with the economy.
BUFFETT: In September.
BECKY: Back in September.
BUFFETT: In September.
BECKY: Where are we now?
BUFFETT: Well, we have done a lot of things that should have been done. I mean, when the--when we--when we guaranteed money market funds, if we hadn't have done that, I mean, it would have been--we would have been going over Niagara Falls instead of--instead of riding up there just above it. If we hadn't done the commercial paper action where the Federal Reserve got into the picture--and their participation has gone down substantially now, but they stabilized that market. We were losing blood by the bucketful in terms of funding and liquidity in September, and the government basically did the right things in order to stem the flow of blood and get the patient so at least you didn't have to work on that aspect of it. And that was vital. I mean, that was--that was Pearl Harbor. And now there's a lot of things to be done. And they can't happen instantly. But the biggest thing right now is clarity as to what will be done in terms of the financial system. And there's been enough mix up with different people saying different things that I think that the--that President Obama is the person to give real clarity to that.
BECKY: We have people asking questions about things that the administration has already put out. In fact, Bob wrote in from Baltimore, Bob Knott, who says, "On a scale from one to 10, how would you assess the value to the US economy of President Obama's recently enacted stimulus plan?"
BUFFETT: Oh, well, the stimulus plan's going to take a long time to kick in. I mean, there'll be certain things kick in fast. But the stimulus plan is part of the recovery, but it's not the most--it's important to put it in, but there's other things that need to be done now to restore confidence. You're not going to--you're just not going to see that much happen. I mean, there'll be things on TV and all of that. But when you're talking about a $14 trillion economy and you're talking about all the things that are worried--people are worried about and scared--and scared is a better word, because that's what they are. There are things that need to be done up front that actually are more important. But I'm still in favor of having a stimulus bill.
BECKY: There are people who are looking for quick solutions. Theodore in Woodstock, Georgia, writes in with the question a lot of people have asked. He says, "Should the SEC suspend mark-to-market accounting?"
BUFFETT: Well, that's a--you know, I've always been theological on mark-to-market accounting, because I've seen so much of what people do when they're allowed to use their imagination on balance sheets or income statements. And frankly, American business misbehaved in a big way, particularly in the '90s. But people did play games with numbers. And they probably still do. But it--there was--it was almost accepted as a way of doing business. So I've always been suspicious when you give a CEO a pen and tell him it's the honor system. And anything other than mark-to-market works in that direction.
Now, it's true, I think, that mark-to-market has had a--it's been some gasoline on the fire in terms of financial institutions. The markets are, on certain things, are pretty unrealistic, which is why I said just a little while ago that I would like to--I would rather buy the toxic assets at market from a bank than their good--than their best assets. There's more money to be made in those and they've been marked to a level where there's a lot of--you know, where they're probably below fair value, in my opinion. So I'm sympathetic. I think the best way to handle that, though, probably still, is to have the mark-to-market figures, but not have the regulators say, `We're going to force you to put a lot more capital based in on these mark-to-market figures.' I say in our annual report, I mark some--we mark everything to market. I say I don't agree with it in certain cases, and I explain my reasons and shareholders can decide whether they think the reasons are valid or not. I hate to give it up.
JOE: Thanks. I want to drill down on a couple of things, Mr. Buffett. We talk about the--you talk about 535 members of Congress, and that you don't think necessarily that, given a crisis, that you should steamroll or have a lot of things put through just because there's a crisis, you mentioned. I'm just trying to drill down on some of these things that are in the budget, and I'm not necessarily sure they're from Congress. I think President Obama knows what's in that budget and definitely, you know, they have his signature on them. And I'm talking about, for example, the carbon tax. Does that make sense here? Does--which ones do, which ones don't? He was talking about the card check--he was talking about card check in EFCA last week. Does that make sense to you, Mr. Buffett?
BUFFETT: I think the most--the more contentious of it, certainly card check is contentious, but I would defer pushing a big agenda. And you know, there's this phrase that a crisis, you know, should not be wasted. Well, I think if you said a war should not be wasted and use that as an excuse to push--try to push through everything in sight, I think--I really think it's a mistake. I don't want to try and call from unity among all our managers while at the same--at Berkshire while at the same time imposing all kinds of new actions on them, many of which they disagree with. You know, that's not an argument for doing absolutely nothing but it's a--it is an argument for deferring some of the things that are going to cause...
JOE: I'm just--which things? Which things, though, Mr. Buffett? I mean, what would you tell...
JOE: You know the president and he takes your advice and he use--he uses your name in talking about who he talks to about the economy.
JOE: Which things would you urge him to put on the back burner right now? Because they're trying to do everything all at once.
BUFFETT: I know, and I don't think that's a good idea. But I also don't think it's a good idea to use CNBC as a way to talk to the president of the United States too much. Although I've done a little of that.
JOE: All right. I have--I have to--I have to ask you, though. I have to ask you which of the things. I know that they're watching, and I--and I know that they're hearing this from you. But--and I think, you know, there are some people that think they need to hear it.
BUFFETT: I would--I would err on the side of doing too much on the--if I--you're going to err on the side of doing--like if you're going to land on Normandy, you know, how many troops do you send in? You probably send in more than you think are needed. I mean, and I would say I would err on the side of doing too much on the economy and I would err on doing too little on the side of a whole bunch of other things I cared about.
JOE: You mean the banking system in the--in the economy is what you're talking about. OK.
BUFFETT: I--yeah, yeah, right.
JOE: All right.
BUFFETT: I--yeah. The job is to get--the job is to get that fixed.
BECKY: All right, you counted on--you commented on mark-to-market. What about the uptick rule? We've had several people who've written in about that.
BUFFETT: Yeah. Yeah, I--there's no--there's no question that it--there's something wrong with people buying stocks and saying untrue things, and there's something wrong with people shorting stocks and saying untrue things. And sometimes it seems like the shorts are a little more eager to spread negative stories than the longs. But I've seen a lot of people on the long side do a lot of things they shouldn't have done, too. I think--I think probably the uptick rule is a good idea. I mean, we had it for decades and the--it--on balance, I probably would have it in. I don't think it's the key to things at all. I mean, I think that--I mean, you can--you can do bear raids of a sort through credit defaults, swaps and all that sort of thing now, and there'll always be people trying to push the bear case. There are people trying to push the bull case all the time. In the end, if you don't owe money on stocks and you own a good business, a good business will not be ruined by somebody selling stock short on an uptick or otherwise. I welcome people shorting Berkshire. I mean, you know what I mean? They're the--they're the sure buyers later on. They have to buy someday, right?
BUFFETT: Again, doesn't make any difference to me, you know, who--there could be a lot of people sell Berkshire every day, there's going to be a lot of people buy Berkshire every day. If somebody wants to sell it short, buy it later on, that's fine with me. I mean, they're going to have to buy it someday.
BECKY: Here's a question from Michael in Mystic, Connecticut. He says, "After showing support and advising President Obama, what are your thoughts on the president openly criticizing the use of corporate jets by CEOs considering the fact that Berkshire Hathaway owns NetJets..."
BECKY: "...and that some of those CEOs are your largest clients?"
BUFFETT: Yeah. Well, when you say considering the fact we own it means that I do have a dog in this fight, and so I--put me down as biased. But I do think--I use a jet both personally and with business. I mean, I have my own things I pay for, but I use it in business. I would say that net--and I'm probably a biased observer, maybe--but Berkshire has been better off by me having a plane available to go and do deals or whatever it may be. A lot of times it doesn't work out. But net, it's a plus. We have done things I wouldn't have done if we hadn't have had a plane. And I think it's--I think he made a mistake in--I think--I think it's--I think it's a big mistake to start demonizing anybody in this game. I just think that it causes the American people to look backwards. And we don't want villains, we want victory.
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